Recovery, what recovery?
Recent economic data releases suggest that the worst phase of the slowdown may be past...
...prompting hopes that a recovery will soon be under way. The key to the sudden improvement is the inventory cycle; when the downturn began, companies were very quick to cut costs by reducing stocks and shedding labour. Now stock pipelines have substantially emptied and orders have begun to flow again. This is clearly good news, but is not a signal that a bounce in activity is imminent. The underlying trends are still constrained by reduced bank lending, excess debt and consumer expenditure which is under pressure from low wage awards and rising unemployment. Any upturn is going to be slow to gain momentum and some of the effects of recession – such as job losses – are likely to continue to deteriorate for some months to come, keeping up pressure on charities exposed to the social cost of economic downturns.
Author: John Kelly
John Kelly is head of client investment at CCLA.
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